Sunak’s private funding plan for HS2 tunnel set to fail, warns adviser

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The National Infrastructure Commission chair has poured cold water on Rishi Sunak’s plan to get private developers to fund an expensive tunnel under London connecting the HS2 rail line to Euston in the heart of the capital.

Last month Sunak cancelled the northern leg of the high-speed railway line, but confirmed that HS2 would run from Euston station in the centre of London to Birmingham in the Midlands.

The UK prime minister claimed that taxpayers would save £6.5bn on the Euston development because developers would pay for the tunnels, tracks and station in exchange for profits from developing houses, offices and shops.

But Sir John Armitt, chair of the National Infrastructure Commission, told the Financial Times that developers would not fund the tunnel needed to connect Euston to the next HS2 terminus in west London.

“You’ve still got to dig 4.5 miles of tunnel and that won’t be paid for by the private sector,” he said in an interview. The commission, set up in 2017 as a Treasury agency, is the government’s official adviser on infrastructure.

Armitt added: “At the end of the day the government will need to be ready to fund the core civil engineering for the final miles of the project.”

His comments cast doubt on the savings the government has claimed from Sunak’s dramatic changes to HS2 that the prime minister announced at the Conservative party conference in Manchester.

The £57bn rail line is Europe’s largest infrastructure project and has been beset by cutbacks, cost hikes and time delays since work started nearly a decade ago.

According to an October government estimate, HS2 now could return “possibly as little as 80 pence for every £1 invested by the taxpayer”.

Under current plans the line is set to run between Euston and Birmingham, including a new large station in west London at Old Oak Common.

The stretch between Old Oak Common and Birmingham is not expected to open for at least another six years while Euston, where work has been paused and there is no agreed plan, will open much later.

Last week, the top civil servant at the Department for Transport, Dame Bernadette Kelly, told MPs that the private sector at Euston would “ideally fund the station approaches and we are also looking for private funding to cover the whole cost of running from Old Oak Common to Euston”.

At another committee hearing last week, transport secretary Mark Harper said the “most obvious comparison” for the public-private model the government planned at Euston was the regeneration of Battersea Power Station, on the south bank of London’s river Thames.

Harper said that at Battersea Power Station the government had “levered in £9bn of private capital”, extended the Northern tube line and “delivered a new underground station by the private sector”. 

“That’s a good indication of what’s possible [at Euston],” he told MPs.

Armitt dismissed the comparison, however, saying that the bulk of that private investment at Battersea “was for real estate investment, rather than for the new Northern Line connection”.

He said that if HS2 did not run all the way to Euston, it would require changes to plans at Old Oak Common and would put pressure on the Elizabeth Line, which has an interchange at the west London changes.

“Ultimately HS2 needs to get all the way into Euston to ensure the scheme is attractive to passengers and doesn’t place huge burdens on the Elizabeth Line,” said Armitt.

The Department for Transport said the line would finish at Euston, “as has always been the case”.

Pointing to the development of Battersea and that at King’s Cross, a DfT spokesperson said “The new plan for Euston represents a world-class regeneration opportunity that offers greater value for money for taxpayers. Our approach has been successfully carried out recently . . . and there has already been significant interest from the private sector to invest.”